What if Uncle Sam Ran a Household on $200k, Not a Bureaucracy on $2 Trillion?

Federal spending translated into digestible figures

Killing ‘Discretionary’ Spending is a Drop in the Bucket

The first step, logically, is to stop spending on “nice to have” stuff. No more landscaping or fancy gardens, no matter how nice the yard looks (Department of the Interior) – that saves $100 a month. Cancel that membership to the planetarium (NASA) – that saves $155 a month…

But unfortunately even killing every single item in the discretionary category only gets us halfway there – $5,500 a month in total. And practically, we can’t pull the plug on all discretionary spending. Nor should we.

Take the $604 a month we pay for our fancy car (Department of Transportation). We could spend our money more wisely, perhaps. But we can’t give up on all forms of transportation. We need to drive to the office or we’ll lose our job.

And there are some pennies that just aren’t worth pinching. The $58 a month for our membership to the local science museum (National Science Foundation) is small potatoes considering our $10,000 shortfall. And if you kill all “fun” expenses and lead an ascetic life, the stress from all the other cutbacks could be darn near unbearable.

Let’s be austere and assume we can slash a whopping 50% out of our discretionary spending. Our new total is $2,750 for this category – a savings of $2,750.

Cutting the Biggest Expenses is a Big Decision

Monthly Income: $18,016

Monthly Expenses So Far: $2,750

Balance Left: $15,266

Of course, the biggest savings have to come from reducing the biggest expenses. But that’s going to be an awfully difficult task.

The $5,841 we spend each month on a plush retirement home for our aging parents (Social Security) is a big burden. It has to be reduced. But slashing that payout dramatically would put Mom and Dad in a place where they will be unhappy and abused. Finding the right balance is going to be hard.

That goes for our own comfort, too. Our great big house with an alarm system in a gated community must be sold thanks to a steep mortgage payment of $5,741(Defense Department). Sure, we could live without the on-call security officer. But do we want to live in a rundown apartment in a high-crime area with poor schools?

Then there are the medical bills. While some of the items making up $6,608 in expenses (Medicare & Medicaid) can be reduced, we can’t just stop taking our prescriptions or going to the doctor altogether. We suffer through more colds without Sudafed, but what happens if we come down with something serious – or have a serious accident?

These are all difficult choices that could have dangerous results if we cut too much. Though it’s a tall order, let’s say for the sake of argument we cut 30% from each item on this list. These major expenses have now dropped from $18,190 to $12,733 – a hefty savings of $5,457.

What Else Can We Cut?

Monthly Income: $18,016

Monthly Expenses So Far: $15,483

Balance Left: $2,533

Unfortunately, this isn’t the end of our family’s monthly obligations. We gotta eat, right? There’s $3,466 more in mandatory expenses to cover.

Now add in the $1,641 (interest payments on our debts) we need each month just to pay the minimum balance on our credit card.

How Do We Close the Gap?

Monthly Income: $18,016

Monthly Expenses So Far: $15,483

Balance Left: -$2,574

So is it time to find another job? Working the second shift at McDonald’s (raising taxes) could hurt our performance at the office and may do more harm than good. But there aren’t many other options.

We could continue to just charge the balance to the credit card even though it will only increase our monthly payments down the road. And of course, all credit cards have their limit.

We could go back to the drawing board and cut more. But it was hard enough finding a nursing home at a cost that’s 30% cheaper – can we really trust our parents to a cut-rate place? Do we really want to live on the other side of the tracks, or stop taking our heart medication?

Tread Water and Hope for the Best

As you can see, the math is impossible to work out. True, my numbers are arbitrary. But if you think you can pull off deeper cuts than a 30% reduction in Social Security and Medicare, by all means post your thoughts to the forum below – and use them to start a campaign for Congress.

The way I see it, the best hope we have is to cut as deeply as possible without undermining the safety of our nation and the security of our seniors. That won’t be enough to balance the budget, but it will buy us some time. After all, our monthly income has declined $4,166 since the go-go days before the recession ($500 billion, from about $2.7 trillion in 2007 to $2.2 trillion projected this year). Maybe if we can cut enough and can see enough of a rebound, things will meet in the middle.

But let’s face facts: As a nation we have been profligate for so long that it’s impossible to make a difference by cutting a few bucks here and there. And the economic outlook isn’t exactly rosy.

Pessimism, of course, doesn’t fix anything either. So the best we can do is to change our lifestyle. It won’t be easy – this will be a lifestyle without most of the small luxuries, with a budget a hair’s breadth from putting our health and safety at risk and could leave our aging parents pissed off at us until the day they die.

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